What procedure should an employer follow if it wants to retire an employee?

If an employer wants to retire an employee, it should follow a fair procedure and the normal unfair dismissal principles will apply. An employer can retire an employee only if it can objectively justify the retirement age. If the retirement age is objectively justified, the dismissal will be deemed to be for "some other substantial reason" for the purposes of the unfair dismissal rules under s.98 of the Employment Rights Act 1996.

It is unclear whether or not the Acas code of practice on disciplinary and grievance procedures applies to objectively justified retirements. In Phoenix House Ltd v Stockman and another [2016] IRLR 848 EAT, the Employment Appeal Tribunal held that the code does not apply to dismissals for "some other substantial reason" due to a breakdown in working relationships, where misconduct is not alleged and capacity is not in issue. While it is arguable that it should not apply to retirement dismissals either, as a matter of good practice, employers should follow the principles of the code when dismissing an employee at a justified retirement age. For example, this could include informing the employee of the reason for the proposed dismissal, allowing them to make representations before a decision is made and allowing them to appeal the decision.

If there is no objective justification for the retirement, the employer must show that there was another fair reason for dismissal under s.98, such as capability or conduct, and must follow the relevant procedure. In this case the dismissal would not be a retirement. If an employer "retires" an employee where this is not objectively justified and where there is no other fair reason for dismissal, the dismissal will amount to unlawful age discrimination and an unfair dismissal.

The employer must give the employee notice of dismissal as required under their contract, or the statutory minimum notice where this is greater.